In a speech in February at the 2009 Chicago Auto Show, John Krafcik, CEO of Hyundai America, voiced the sentiment of many a consumer: Americans would rather go to the dentist than visit a car dealership. He chalked this up to manufacturer sales programs at dealerships that put more focus on “moving the iron”—selling vehicles—than satisfying consumers. Krafcik said a key component to how automakers and dealers could change this—to make buying a car a better experience than getting a tooth pulled!—is for them to admit that their sales tactics produce this feeling of dread.
Obviously, this struck us as a bit of a revelation, and if automakers and dealers take Krafcik’s suggestion, the timing couldn’t be better for them. Consumers are staying away in droves, because they’re on financial pins and needles. In 2008, the number of dealerships in the country dropped a net of 760, according to National Automobile Dealers Association, and the number is expected to slide another 900 in 2009.
But for those of you who can consider a car purchase, you should know that you can expect to see lower prices at least through the summer. Can you expect to find the exact vehicle that you want? You might encounter some obstacles regarding that aspect of navigating a purchase.
IN THE DRIVER'S SEAT. Marc Cannon, spokesperson for AutoNation, an automotive retailer that operates in 15 states, estimates that you will pay 5 percent to 15 percent less for vehicles today than early in 2008.
Why? Many dealers are on the brink of failure, and others can see the collapse looming ahead and want to change course. During the first half of 2008, U.S. auto sales were moving along at a clip that would translate into an annual rate of 13 million to 14 million vehicles, Cannon says. But starting Sept. 15—the day that Lehman Bros. filed for bankruptcy—a major downshift in sales translated into a rate of annual sales of 10.5 million vehicles—a decline of more than 10 percent. The year ended with industry sales of 13.2 million vehicles. Industry sales over the first 2 months of 2009 were projecting to an overall sales mark of 9.7 million vehicles for the year, down from a level of 10 million after the first month of the year.
“What the consumer has to realize is they’re in control now,” says Howard Polirer of AutoTrader.com, which lists thousands of vehicles for sale from dealers. “It used to be the other way around.” For decades, salespeople have employed something that is called push selling, which means that it doesn’t matter what you want; it’s what the salesperson wants to sell. The people who sell cars right now even in the down economy are the ones who practice pull selling, Polirer says. Pull selling means, very simply, that your wants and needs come first.
Polirer is convinced that dealerships never have been more eager to sell than they are now and that you should expect dealers not only to meet your expectations but to exceed them.
Accounts from the front lines seem to indicate that many shoppers already have this expectation when it comes to new vehicles. “The consumer is walking in the front door looking for a deal. Like Christmas shopping, it’s ‘Where’s the sale? Where’s the discount?’” begrudgingly admits Joel Enright, new-car manager at Muller Honda, Highland Park, Ill.
But Robert Krughoff, president of nonprofit Center for the Study of Services, cautions you not to rush the process. “It is more important now than ever to get dealers to bid competitively for your business,” he says.